On January 1, 2013, Conji Ltd. acquired 25% of the shares of Porter Ltd. for $42,500. At this date, all the identifiable assets and liabilities of Porter Ltd. were recorded at amounts equal to fair value, and the equity of Porter Ltd. consisted of: $$\begin{array} { l c }
\text { Share capital } & \$ 100,000 \
\text { Asset revaluation reserve } & 20,000 \
\text { Retained earnings } & 50,000
\end{array}$$During 2013, Porter Ltd. reported a profit of $25,000. The asset revaluation reserve increased by $5,000, this being reported in other comprehensive income. Porter Ltd. paid a $4,000 dividend. At January 1 2013, Conji Ltd. recorded the investment in Porter Ltd. at $42,500
The share of profit or loss of associate that Conji Ltd. should record is

Question

On January 1, 2013, Conji Ltd. acquired 25% of the shares of Porter Ltd. for $42,500. At this date, all the identifiable assets and liabilities of Porter Ltd. were recorded at amounts equal to fair value, and the equity of Porter Ltd. consisted of: $$\begin{array} { l c } 
\text { Share capital } & \$ 100,000 \
\text { Asset revaluation reserve } & 20,000 \
\text { Retained earnings } & 50,000
\end{array}$$During 2013, Porter Ltd. reported a profit of $25,000. The asset revaluation reserve increased by $5,000, this being reported in other comprehensive income. Porter Ltd. paid a $4,000 dividend. At January 1 2013, Conji Ltd. recorded the investment in Porter Ltd. at $42,500
The share of profit or loss of associate that Conji Ltd. should record is

Quizplus · Accepted Answer

Conji Ltd. owns 25% of Porter Ltd., so it should record 25% of Porter Ltd.'s profit for the year. Porter Ltd. reported a profit of $25,000, so Conji Ltd.'s share is 25% of $25,000, which equals $6,250.

On January 1, 2013, Conji Ltd During 2013, Porter Ltd